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More District 51 cuts loom

A state revenue gap of unknown proportions, a trio of ballot measures that would constrict funding opportunities, and the threat of losing students and the money that comes with them have made writing a school district budget an unenviable task in Colorado.

District 51 Superintendent Steve Schultz has been told the district could face $8 million to $10 million in cuts in 2011-12. The district already started the budget process for 2011-12 with $10.5 million in cuts that will carry over from the current budget year.

“As big a mountain as we climbed last year, it’s going to be just as big this year,” Schultz said. “(Any cuts) will be more controversial than the last round.”

Even the current budget year isn’t untouchable. A repeat of last year, when the state sucked back a portion of every school district’s budget, is never out of the question for the adopted 2010-11 budget.

A June revenue forecast predicted a $214.5 million shortfall in the 2010-11 state budget. A September state revenue forecast will paint a more timely picture and help determine education funding’s fate at the state level.

State Rep. Laura Bradford, a Collbran Republican, said she is not sure how much legislators will have to cut when they return to session in January, but she expects a paring down of the state budget. She said she will suggest cuts to areas such as the Department of Local Affairs first, but no department is immune.

“Every session the assembly has the best intentions of protecting education dollars, but they’re not exempt from the question, ‘Can you make cuts and where?’ ” Bradford said.

The state will be required to provide fewer dollars to education beginning July 1, 2011, with the expiration of the part of Amendment 23 that requires base education funding to increase by inflation plus 1 percent each year. Thereafter, only the Inflation requirement will remain.

Any further changes to education funding formulas is unlikely this year, according to state Rep. Steve King, R-Grand Junction. But it’s an option he’d like to examine later.

“The way that our system is set up right now, especially under Amendment 23, rather than raising the bar for education, it’s created an entitlement to funding,” King said. “It’s one thing to throw money at a problem, but if you’re not seeing a turnaround, what good is that money?”

It’s not how much a district gets but how the money is spent that determines how students will benefit from funding, said Marcia Neal, a state Board of Education member and former District 51 school board member. The state board hopes to shore up some money for efforts such as a new student assessment with Race to the Top Funding from the federal government, she said. Colorado is one of 19 finalists for Race to the Top grant dollars. Winners will be announced in September.

Neal said the board voted 4-3 to adopt national curriculum standards in an effort to endear Colorado to Race to the Top reviewers. Neal voted against the adoption, but said she understands the vote.

“It boiled down to a matter of money,” she said. “If we don’t get this money, we probably won’t be able to meet the timetable for (creating) the new assessment.”

Triple threat

Funding education could get more interesting if Amendments 60 and 61 and Proposition 101 pass this November.

Proposition 101 ratchets down the state income tax from 4.63 to 3.5 percent, eliminates taxes and charges on most telecommunication services, and reduces or eliminates various vehicle taxes and fees, including reductions in specific ownership taxes. The district has budgeted $6.87 million in specific ownership revenue for the 2010-11 budget.

At the end of the four-year, phased decrease in specific ownership tax rates proposed by Proposition 101, the state may be limited to providing the district with $250,000 from this source, according to District Support Services Executive Director Melissa Callahan DeVita.

“The difference would have to come from the state,” DeVita said.

Decreasing income taxes wouldn’t directly effect the school district, DeVita said, but it is one source the state uses to provide its portion of funding to school districts.

Amendment 60, which focuses on lowering property taxes, includes a provision demanding school districts phase out half of the 2011 tax rate by 2020. Property taxes are expected to provide $50 million locally for the 2010-11 school year. If that rate holds another year, District 51 would be expected to collect no more than $25 million in property tax for its budget in 2020.

School districts would receive no less money, but the state would be tasked with filling the gap.

District 51 is perhaps the most concerned about the direct effects of Amendment 61, which limits borrowing, forbids debt and keeps loan periods to a year or less. While the school board is expected to approve a resolution condemning all three measures later this month, Amendment 61 is the only measure the board is considering taking action to offset with a potential November ballot question.

There are two ballot measure options for the district, according to DeVita. One option is to ask voters for permission to sell bonds that would be used for cash-flow shortages to offset the amendment’s ban on interest-free, cash-flow loans from the state to districts. Another option is to ask voters’ permission to keep the district mill levy rate flat during and after borrowing. That would work around a part of the amendment that makes property tax rates decrease after a loan taken out by a property-tax-revenue recipient is repaid.

Amendment 61 also shortens the time a school district could spend paying off a bond issue with property tax from the customary 20 to 30 years down to 10 years. Property tax increases related to bond issues would have to be bigger as a result.

“It would make it harder to pass them,” District 51 School Board member Diane Rice said, referring to bond measures.

Board member Leslie Kiesler said she sees how tax reductions may appeal to voters, but she wants them to know the consequences of Amendments 60 and 61 and Proposition 101.

“They would line some wallets, but what they would do to the city, the county, state infrastructure and schools would be devastating,” she said.

Fewer students, fewer dollars

While preparations may be made for dealing with a voter-determined possibility, the district is bracing for a near-definite in the form of losing students. District 51 had 22,030 students in late September 2009, according to the Colorado Department of Education. A year before, the district had 22,159 students. The 129-student loss accounted for a monetary loss of more than $800,000.

The district lost 90 students over the course of the past year and has budgeted for a drop of 200 students on the first day of school this month compared with the last day of school in May, based on a demographer’s report. With expected per-student funding set at $6,471, that’ would mean a loss of $1.3 million.

A million dollars is somewhat of a drop in the bucket for a district with a $154 million general-fund budget. But finding any room to cut is hard with enrollment decreases, DeVita said. Student drops rarely happen in large clumps in a certain grade at a certain school, so eliminating teachers and support staff, which make up a majority of the district’s budget, isn’t often an option, she said.

“Cuts have to come from other places,” DeVita said. “There’s not a lot of wiggle room.”

The “good” news

There’s little positive news to share about funding education given the current state of the economy. But there are some consolation prizes.

Referendum C allowed the state to retain tax revenue over Taxpayer Bill of Rights (TABOR) limits for certain uses, including education, through the fiscal year ending June 30, 2010, and it provided money through the end of the 2010-11 school year. Thanks to the recession, it won’t make much immediate difference when that ability expires. There haven’t been any collections over TABOR limits since 2007-08, according to the Office of State Budgeting and Planning.

The mill levy freeze approved in 2007 won’t effect school district funding in areas where the recession has devalued properties, but it may mean bad news for the state. The freeze makes district mill rates unmovable when property values increase or decrease. With the freeze in effect, falling property values mean lower property taxes, which means a smaller amount of the total funding package for a school district will come from local dollars. That means an increased burden for the state, not decreased funding for a district.

School District 51 can expect property tax revenue to remain steady for this school year, according to Mesa County Assessor Barb Brewer, because the county is still using assessments from better times. District 51 is better situated than the other three school districts in the county, Brewer said, because rigs stored near Fruita are helping prop up oil and gas assessments, which are assessed yearly.

The school district isn’t entirely out of the woods. Brewer expects collections for 2012 and 2013 to drop after property values are re-assessed next year.